Stocks Fall, Dollar At Five-Month Low
TOKYO (AP) _ The Tokyo Stock Exchange’s key indicator erased its morning gains and fell back today, while the dollar closed at the lowest level against the Japanese yen in five months.
The dollar ended at 146.65 yen, down 0.85 yen from Tuesday’s 147.50-yen finish. It opened lower at 146.00 yen and ranged between 145.60 yen and 146.65 yen.
The dollar has lost 4.1 yen from last Friday and is at its lowest since its 146.47-yen close on February 23.
Dealers said the dollar, which also was sold in New York over the narrowing interest rate gap between Japan and the United States, fell below the 146-yen level when institutional investors dumped the dollar as soon as Tokyo’s morning session started.
″Under the current situation with little difference in (both country’s) interest rates, there’s no reason to buy the currency (dollar),″ said a dealer with Dai-Ichi Kangyo Bank.
Lower interest rates tend to make a country’s currency less attractive to foreign investors.
But the currency soon rose and ended higher than the opening because ″there was a greater than expected demand for the dollar below the 146-yen line,″ said Yutaka Hayashi, a dealer with the Mitsui Taiyo Kobe Bank.
About $13.55 billion changed hands in spot trading, up from Tuesday’s $12.97 billion.
On the stock exchange, the 225-share Nikkei Stock Average shed 197.67 points, or 0.64 percent, ending the day at 30,837.99. The index rose 592.71 points on Tuesday, breaking its fall over the last seven consecutive days.
The Nikkei was up 236.20 points at the end of morning trading because of confidence from stability in the bond market, traders said. It then fell back in the afternoon mainly because of arbitrage selling for profit-taking before Aug. 9, the final day of trading of August options, they said.
″The market is still very weak, and any news can easily affect trading, and (negative news) can discourage market players’ buying interest so easily,″ said Masaki Wakabayashi, a trader with Yamaichi Securities Co.
He said traders were pessimistic about upcoming statistics on the performance of the U.S. manufacturing industry.
The index had lost 2,176.03 points, or 6.58 percent, between July 20 and July 30.
Trading was thin with first section volume estimated at 430 million shares, up from Tuesday’s 380 million.
In bond dealing, the yield of the benchmark No. 119 10-year Japanese government bonds fell to 7.505 percent at 4 p.m. from Tuesday’s 7.535-percent close. The price stood at 85.61 points, up from 85.47 points.